[amp_mcq option1=”Large number of buyers and sellers” option2=”Small number of buyers and sellers” option3=”Free entry and exit” option4=”Goods is homogeneous” correct=”option2″]<\/p>\n
The correct answer is: B. Small number of buyers and sellers.<\/p>\n
Perfect competition is a market structure in which there are many buyers and sellers of a homogeneous good or service, and there is free entry and exit into the market. In a perfectly competitive market, firms have no market power, and prices are determined by the forces of supply and demand.<\/p>\n
A small number of buyers and sellers would not be a feature of perfect competition because it would allow firms to have market power. Market power is the ability of a firm to raise prices above the competitive level without losing all of its customers. If there are only a few firms in a market, they may be able to collude and raise prices above the competitive level. This would harm consumers, as they would have to pay higher prices for goods and services.<\/p>\n
The other options are all features of perfect competition. A large number of buyers and sellers ensures that no one buyer or seller has a significant impact on the market. Free entry and exit allows firms to enter the market if they see an opportunity to make a profit, and exit the market if they are not making a profit. Homogeneous goods ensure that all firms in the market are selling the same good or service, so consumers can choose the firm that offers the best price.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Large number of buyers and sellers” option2=”Small number of buyers and sellers” option3=”Free entry and exit” option4=”Goods is homogeneous” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-47953","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n